Re-denomination of the cedi is necessary
The reduced weight of the cedi would
definitely enhance the use of such electronic
systems of payment and reduce our
unhelpful attachment to the use of notes.
THE STATEMENT by the Committee for Joint Action (CJA) on the redenomination of the cedi was welcome in one respect: It was a good attempt to contribute to the ongoing discussions on the move by the Bank of Ghana to make transactions with our currency more efficient. It is proper to address some of the reservations the group raised.
To achieve a more efficient currency, the redenomination seeks to address two problems that have become associated with the use of the current denominations of the cedi.
First, it is a common concern that the zeros have become too many with the current denominations. Today, many transactions are made with amounts in excess of a million cedis (¢1, 000, 000).
That amount alone carries six zeros. A billion cedis (¢1, 000, 000, 000) carries nine zeros, and a trillion cedis (¢1, 000, 000, 000, 000) carries twelve zeros. The occurrence of the many digits poses difficulties for book keepers and puts stress on many electronic devices.
The evidence is the emergence of electronic calculators that have keys that produce multiple zeros at a single press. Again, the use of symbols such as 'm' for a million, 'bn' for a billion, and 'tr' for a trillion are indications that we are sick and tired of the many zeros.
The redenomination will remove four digits from the current cedi figures while maintaining their original values. Thus, ten thousand cedis (¢10, 000) will become one Ghana cedi (Gh¢1) and will retain its value on the market. A million cedis (¢1, 000, 000) will become hundred Ghana cedis (Gh¢100), etc.
This will certainly reduce the stress on our electronic devices and relieve book keepers of the burden.
The second benefit of the redenomination is the reduction in the dead weight of the money we carry. The CJA is right in saying that the exercise will make the cedi more portable. In addition to removing zeros, higher notes of the resulting denominations will be introduced. The highest note being fifty Ghana cedis (Gh¢50).
Put in another way, a five hundred thousand cedi (¢500, 000) bundle of the current denomination will become a single note of Gh¢50 which can be folded easily and kept in one's breast pocket. This obviously will reduce the inconvenience of carrying large quantities of money and lessen the risk of being attacked by robbers.
I sense a bit of confusion when the group suggests that instead of redenomination, the Bank of Ghana should rather be encouraging the use of credit cards and other electronic systems of payment. The fact is the large volumes and dead weights of our money make electronic payments difficult.
For instance, currently, most automated teller machines (ATM) cannot allow a withdrawal of more than one million cedis at a go because of the large volumes of the money we use. The option left is then to withdraw several times if the user desires to withdraw more than a million cedis. For some of the systems, each withdrawal comes with a charge. These are obvious inconveniences that discourage many people from using ATM payments. Further, the large volumes and weights of money limit the amount card issuers can make available to the ATMs.
The reduced weight of the cedi would definitely enhance the use of such electronic systems of payment and reduce our unhelpful attachment to the use of notes.
The CJA's suggestion that we allow the problems associated with the use of the current denominations to persist until the introduction of the West African single currency is unacceptable. Of course, Ghana is committed to the monetary union. But the fact remains that we do not know when exactly this union will happen. While we work with our sisters in the West African sub-region towards it, we have a responsibility to put our own house in order.
It is also worthy of note that Article 183 of our Constitution vests the power of printing and managing our currency in the central bank, the Bank of Ghana.
Traditionally, the statement of the expenditures involved in the discharge of their constitutional mandate is published annually and audited by the relevant state institutions. This is public record. The cost of the redenomination could be obtained from such records by any group or interested member of the public.
It would have been wrong to capture the redenomination and its associated expenditures in the 2007 Budget. To have done that would have meant subjecting the Bank of Ghana's decision on the management of our currency to the approval or rejection of Parliament. That clearly would have been unconstitutional. We should just run away from that proposition.
Finally, the CJA feels concerned that the President and the government are taking credit for the redenomination and using it in their “propaganda” messages. But why shouldn't the President take the credit? If a government is able to stabilise the economy so that the Bank of Ghana is able to redenominate our currency for the benefit of the citizenry, I don't see why the President and his government should not take the credit for it. After all, that is what governance is about; doing things that benefit the people.
Kwaku Kwarteng
Head of Communication